Taxes

The Katy area and the great state of Texas have created dynamic and growing economies with the help of a pro-business tax structure and pro-business climate. Some key features of the tax and business environment include: no state income tax on persons or businesses, no local income or occupational taxes on persons or businesses, a low franchise tax, a strong tort reform law and Employment-At-Will and Right-to-Work laws.

Franchise Tax

The State of Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. State of Texas franchise tax rates are: 0.75% for most entities; 0.375%  for qualifying wholesalers and retailers; and 0.331% for those entities with $20 million or less in annualized total revenue using the "E-Z Computation."

Ad Valorem (Property) Tax

Ad Valorem or property taxes are assessed at the local level on real and personal property for various taxing districts. Property is assessed per $100 valuation at 100% by County Appraisal Districts annually, unless otherwise noted. Numerous property tax exemptions are available for qualifying properties. Below are some property tax rates for various districts and for selected business areas.

Ad Valorem (Property) Tax Rates - 2018
Taxing District Rate ($) - 2018
Katy ISD 1.5116
City of Katy 0.48672
City of Fulshear 0.16251
City of Houston 0.588310
Fort Bend County 0.46400
Harris County 0.418580
Waller County 0.686856

Sales and Use Tax
Sales and use tax rates for the City of Katy, City of Fulshear and City of Houston are one percent (1%). Special purpose districts such as Metro have a rate of one percent (1%). The State sales rate is 6.25%. The maximum total sales tax for any area in Texas is 8.25%. Numerous sales tax exemptions may be available for qualifying economic development projects.

Fuels Tax
The Texas Fuels Tax is $0.20 per gallon. There is no local fuel tax.

Unemployment Insurance(UI)
Companies employing one or more employees may be required to pay state unemployment tax.  A minimum of six quarters is required to obtain an experience rating.  Starting rate in the State of Texas 2.7% and is based on the first $9,000 in earnings. 

Employer Contribution Rates (Estimated 2018)
Average UI tax rate as a percent of taxable wages, Texas 2.59%
Average UI tax rate as a percent of taxable wages, U.S. 2.21%
Average UI tax rate as a percent of total wages, Texas 0.51%
Average UI tax rate as a percent of total wages, U.S. 0.58%
Source: U.S. ETA (Employee & Training Administration, 2018)  

Workers Compensation Insurance
Options for Workers Compensation include self-insurance, the state operated Texas Workers Compensation Insurance Fund, or a licensed private insurance company.

Workers’ Compensation Program Costs per $100 of Covered Wages (Employer Cost)
Texas (2016) .67
U.S. (2016) 1.36
Source:  National Academy of Social Insurance,  2017


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